Minnesota Governor Signs SF 4760, Enacting Nation's First Legislative Ban on Prediction Markets
Key Takeaways:
- Minnesota passed a sweeping ban on prediction markets: SF 4760 makes operating, hosting, and advertising prediction markets a felony.
- Expect legal challenges: The CFTC and individual platforms are expected to sue before the August 1 effective date, and the early court records favor the platforms.
- Prediction markets remain legal in other states: SF 4760 makes Minnesota the first state to legislatively ban them, but it's an extension of the state's broader anti-gambling stance.
Minnesota has officially become the first state in the US to ban prediction markets by explicit legislative means. Gov. Tim Walz signed SF 4760 on May 18, just days after the legislature forwarded the bill on May 14. The law faces significant legal headwinds before it can even take effect.
For users in the rest of the country, prediction market platforms like Polymarket remain legal and federally regulated, and early court rulings suggest the legal landscape may not favor Minnesota's approach.
What SF 4760 Does
SF 4760 creates a new section of Minnesota law titled "Prediction Markets," defining the term as "a system that allows consumers to place a wager on the future outcome of a specified event that is not determined or affected by the performance of the parties to the contract."
Under the new law, Minnesota considers trading on most types of designated contract markets, such as Kalshi, to be gambling, and labels contracts connected to sporting events as sports wagering, which is illegal in the state. Operating or hosting a prediction market in Minnesota would be a felony, and advertising or marketing one would be as well.
All provisions are set to take effect August 1, 2026, assuming the law survives any legal challenges.
How the Bill Came Together
SF 4760 began as a broad public safety package covering retail theft, fraud, impaired driving, and victim rights. Prediction markets were not part of the original bill.
The Senate had separately passed standalone prediction market legislation by a 56-10 vote in late April, but that bill gained little traction in the House. Instead, a House member proposed an amendment adding language on prediction markets to the already-moving SF 4760.
The Senate initially refused to concur with the amended version, sending it to a conference committee, which approved compromise language before both chambers passed the final bill—the Senate 57-9 and the House 100-32.
Notably, Minnesota is not taking steps to protect revenue from legal sports betting. The state is one of 11 where no form of sports betting is currently legal. The prediction market ban is, in effect, an extension of Minnesota's broader resistance to expanded gambling, not a reaction to market competition.
How Prediction Markets are Responding
Prediction market operators have forcefully pushed back, and their core argument centers on federal jurisdiction. Kalshi has consistently argued that its event contracts fall under federal law rather than state gambling statutes, and CFTC Chair Michael Selig recently stated that prediction markets and sports betting are "two separate things," emphasizing that event contracts should be treated as financial instruments rather than gambling products.
Kalshi spokeswoman Elisabeth Diana put it bluntly on social media:
Legal Challenges Expected—Potentially Before August 1
Minnesota's law faces a difficult legal road, and recent court decisions in other states offer a preview of what may come. In Arizona, a federal judge recently issued an order blocking state officials from enforcing gambling laws against prediction market companies, ruling that Congress gave the CFTC sole oversight of swaps and event contracts. The CFTC has sued multiple state governments over similar enforcement actions, arguing that federal law grants it exclusive jurisdiction over event contracts.
Challenges to Minnesota's law could arrive even before August 1. Complaints could cite the Supremacy Clause of the US Constitution, arguing that Minnesota's statute directly contradicts federal law, and could ask courts to block the state from implementing it while litigation proceeds. Both prediction market operators and the CFTC are potential plaintiffs.
What Does This Mean for Users Outside Minnesota?
For now, this only affects Minnesota. Kalshi, Polymarket, and other federally regulated prediction market platforms continue to operate legally across the vast majority of the country, and the federal regulatory framework that governs them remains intact.
How courts ultimately rule on Minnesota's law will carry significant weight—for the CFTC, for prediction market operators, and for state legislators watching from the sidelines. If Minnesota successfully defends its statute, it could signal that similar laws might hold up elsewhere.
But if federal courts strike it down, that ruling would reinforce that CFTC-registered prediction markets are protected from state-level gambling enforcement, and give the industry a durable legal foundation to build on.
